Proper Worker Classification Is "Uber" Important

DOL Employee Benefits News

Uber, the transportation network company, will pay $4,152.20 in two months of reimbursable business expenses and interest to one of its drivers after the misclassifying the driver as an independent contractor. This comes after the California Labor Commission ruled the driver was, in fact, an employee. Although Uber identifies itself “as nothing more than a neutral technological platform,” the commission says that drivers don’t have enough work freedom to be classified as independent contractors. This is because Uber has control of too many of the operations, such as setting the prices for each fare, dissuading drivers from accepting tips and mandating specific car requirements. Uber has since appealed the decision.

It’s important to properly classify your tech workers because of employment laws. Numerous employment laws cover only employees and misclassification of workers as non-employees could deny them their associated legal rights and benefits. According to the U.S. Department of Labor, such laws include:

Fair Labor Standards Act (FLSA). The requirement that employers pay minimum wage and overtime rates for employees. Misclassifying an employee as an unpaid intern, perhaps, restricts the worker from receiving their legal wages.

Workers’ Compensation. The specifics are determined by the state, but the overall purpose is to provide medical care and compensation to injured workers. Misclassifying a worker as an independent contractor instead of an employee could result in failure to provide the correct compensation for work-related injuries.

Family and Medical Leave Act (FMLA). This requires employers with 50 or more employees to give up to 12 weeks of unpaid, job-protected leave to eligible employees for the birth or adoption of a child or for the serious illness of an employee or a spouse, child or parent. If a worker isn’t classified correctly, they wouldn’t receive this option.

The Uber case is just one example of the recent focus and enforcement of proper employee classification. Large class action lawsuits against Uber and other companies are getting a fair amount of media attention. This could cause some independent contractors to want to look at how they are classified with your company and possibly realize their rights have been restricted.

You should stay abreast of the media developments in this area and continually evaluate whether your worker classifications are correct. Doing so can help keep your workers happy and your company out of the courtroom. Don’t hesitate to contact us if you have additional questions.

Liz Smith is President at Assurance and a member of the executive management team. As Assurance’s top employee benefits professional, she's responsible for the overall vision and strategy of the benefits department. She serves a key role in advising the company’s benefits consultants and creating and maintaining strategic relationships with carriers and other vendor partners. Liz received a Bachelor of Science degree in Communications from Northwestern University in Evanston, IL. She's a member of the Aetna National Advisory Board, BC/BS Producer Advisory Council, Union League of Chicago and the Northwestern University NClub.

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